The Economic Forecasting Advisory Board voted on revised state revenue forecasts after April tax receipts came in below projections, with staff and members saying the shortfall reflects unusually large individual refunds and shifting of pass-through entity tax (PTET) payments between corporate and individual tax categories.

Board staff presented updated data showing April individual income tax refunds in the range of roughly $300 million for April (far above the $20 million the board used in its February projection) and described an overestimation in the forecasted combined ‘‘final and estimated’’ individual payments of about $250 million. To account for receipts and timing seen in April, staff reported they manually reduced the board’s individual income tax estimate by about $200 million for the current fiscal year and added roughly $100 million to corporate tax receipts to reflect PTET-related shifts that their models under‑accounted for.

Why it matters: The board’s certified forecast drives certain statutory actions and affects the state’s cash-reserve treatment and legislative planning. Members said the changes are large enough to warrant clearer communication ahead of meetings and asked staff to provide near-immediate updates when material adjustments occur.

Details of the revision and the board discussion

Forecast staff told the board that national forecasts from S&P and Moody’s (used as inputs) do not assume immediate tariff policy changes or monetary easing beyond specific dates; staff said those assumptions matter because if tariff policy hardens, it could increase recession risk and change revenue paths. Staff emphasized the April data, saying that: sales and use tax collections were modestly below forecast, corporate collections were down, and individual income tax net receipts were most affected by unusually large refunds and timing shifts.

Staff presented the mechanics behind the change: their model showed overly high ‘‘final and estimated’’ individual payments relative to collections through April (about $525 million collected versus a forecast of a much larger amount), implying an overestimate of roughly $250 million. To offset that and better reflect PTET payments that appear in corporate receipts, staff described a post‑model adjustment that shifted $200 million out of individual income tax and added $100 million to corporate income tax for the current year. Staff said they applied similar distributional adjustments to fiscal years 2025–26 and 2026–27 to better align the board’s forecasts with the April data and the way PTET payments are flowing into revenue accounts.

Board members pressed for clearer written notes in advance when material changes arise and asked staff to show the line-by-line comparisons between the board’s forecast and the Department of Revenue’s numbers so differences in assumptions (timing, interest rates, PTET treatment) can be resolved. Several members said they appreciate staff applying professional judgment when model outputs appear inconsistent with real‑time data but urged the offices to coordinate earlier so the committee sees changes before packet release.

Votes at a glance

- Current fiscal year (FY 2024–25): Board adopted the revised receipts forecast as presented by staff (distributional change: roughly -$200 million individual income tax / +$100 million corporate income tax compared with the February estimate). Motion and roll call passed; mover/second not specified in the transcript. (See provenance lines for the discussion and vote.)

- Fiscal year 2025–26: Board adopted the revised forecast with staff’s adjustment to shift $200 million from individual to corporate receipts (resulting aggregate receipts adopted by the board: $6,865,000,000). Motion and roll call passed; mover/second not specified.

- Fiscal year 2026–27: Board adopted the revised forecast with the same distributional adjustment (aggregate receipts adopted by the board: $6,925,000,000). Motion and roll call passed; mover/second not specified.

Discussion points and directions

- Forecast sensitivity: Staff said national forecast inputs do not build in more-expansive tariffs or earlier interest-rate cuts; board members noted that tariff policy and federal actions could materially change the outlook and requested the offices continue to stress-test scenarios.

- PTET/PTAB treatment: Both board staff and Legislative Fiscal Office staff acknowledged that current models do not fully capture the shift of PTET payments between individual and corporate categories. The board asked staff to coordinate on methodology and to provide clearer documentation (including a line-by-line reconciliation) before the next meeting.

- Communication: Several board members asked for an email or brief update in the day(s) prior to meetings when material, last-minute data arrive, so members have time to review changes before voting.

What remains uncertain

Staff emphasized that some of the April refund timing could reverse in later months (for example, refunds recorded in October rather than April in future years depending on taxpayer elections), and that federal tax-law changes (an unwinding of PTET treatment) would change receipts across categories. Staff also noted the board’s April meeting date meant only partial end-of-month data were available; members discussed whether moving the meeting date later in the month would materially improve accuracy and requested an empirical comparison of typical last‑days’ receipts versus the mid‑month snapshot.

Ending: The board set its next meeting for October 31 at 10 a.m., and members adjourned after approving the revised forecasts and requesting follow-up reconciling data and clearer pre-meeting updates from staff.